Kelly E. Marks Discusses Giving Trends in Western New York

By Tracey Drury, originally published in Buffalo Business First on Dec 1, 2017, 1:55am EST, Updated Dec 1, 2017, 9:30am.

Giving trends in Western New York

As the year draws to a close, individuals, companies and foundations are finalizing their annual giving decisions, but with many different goals in mind.

For most, tax deductions are certainly a consideration, especially as the conversation continues in Washington, D.C., about tax reform and potential changes to charitable deduction allowances and itemization. But for many others, the holiday season brings a reminder of how thankful they are for their health and financial position, prompting a compulsion to share some of that wealth and comfort with the less fortunate.

Regardless of the reason, charities and nonprofit groups are anxious for the excess, which might enable them to provide more or enhanced services or simply help balance the budget.

Western New York charities and grantmakers, as well as national philanthropy experts, talked about how charitable giving has changed.

On the individual giving side, the Chronicle of Philanthropy analyzed itemized donations from thousands of 2015 tax returns. The Erie-Niagara region was among the 381 areas studied by the publication for a report titled, “How America Gives.”

With a population of just over 1.1 million, the region (officially the Buffalo-Niagara Falls-Cheektowaga metro area) reported $419 million in itemized contributions. That’s an average of $3,411 or 2.3 percent of gross income per person who chose to itemize their 2015 taxes. That may sound generous, but according to the report, there is untapped potential or giving opportunity for another $125 million, if giving rates matched the national average.

And compared to metro areas of similar size, the region’s giving rate is nearly 25 percent behind.

“If you could raise each of those income groups up to the average for that size metro area, you would realize those dollars,” said Drew Lindsay, senior editor of the Chronicle of Philanthropy.

So does that mean local charities aren’t doing enough to reach their full potential? Not necessarily.

Lindsay said markets across the country struggle to boost charitable giving, and have been for years. Even the wealthiest areas deal with the issue, including Silicon Valley, which despite all the technology wealth has lots of needs in the areas of poverty and social need.

“We don’t have the answer for what they should be doing. It’s an issue every year,” Lindsay said. “The country as a whole has not been able to get off that 2 percent for a long time.”

Nationwide, the report found that the number of people who itemize their donations dropped from 31 percent in 2006 to about 24 percent for 2015. But though there are fewer people who report giving, those who do tend to be wealthier and report giving more.

Indeed, Buffalo has plenty of untapped potential when it comes to giving. Some prefer to pass their wealth to the next generation while others look ahead to legacy giving opportunities through a charitable trust, by establishing a family foundation or making a major gift in their will versus smaller gifts during their lifetime.

Kelly Marks, a partner at Phillips Lytle LLP who specializes in tax law, counts some of those people among her clients.

“We have millionaire-next-door type people who are very private about their wealth and private about their philanthropy, and I suspect not all of them are involved in charities,” Marks said. “Also, there’s still some remembrance of the economic uncertainty that we saw a few years ago.”

As a former board president of Irish Classical Theatre and with a roster of nonprofits on her client list, she brings a unique perspective. She said those wealthy clients could become donors if they’re approached the right way.

“I don’t think for most donors that taxes drives the decision,” she said. “When I’m working with donors or individual clients on things like private foundations or reviewing an endowment agreement, we’re not talking tax. Their motivation is if they really care about an organization and what it does for the local community. So it’s always good to tout your achievements at year-end and show how donor gifts help advance that mission.”

For charities, that brings a conundrum: Do they concentrate their solicitations on wealthier individuals rather than those with low or moderate incomes?

That depends on whom you ask.

Individual contributions make up the bulk of revenue, about 96 percent, of the $8 million raised each year by the Buffalo City Mission. Those contributions range from a few quarters taped to a postcard to six-figure checks. The average donation is $52.

Executive Director Stuart Harper said most of the donors are older than 50, live in the suburbs and look to support nonprofits they trust. At 100 years old, the City Mission fits the bill for most, with a reputation of turning lives around.

Though the agency has landed a few major gifts from wealthy donors, Harper said that ignoring smaller, less-affluent individuals would leave out some of the most dedicated supporters.

“We’re supported by the blue-collar community of Buffalo. They’re monthly givers and they give us their credit card or send a check every month,” he said. “We may not support the normal demographics of donations but we get some pretty specific stories about why people support us. A lot of people have been touched by addiction and alcoholism and poverty.”

Daniel Hart tells a similar story. He is executive director of the Buffalo Philharmonic Orchestra, which regularly receives six- and seven-figure gifts from both wealthy families and private foundations. Still, the majority of the 4,000 donors who support the organization do so with smaller gifts.

“We have a lot of people who don’t even come to the BPO who give smaller gifts,” Hart said. “While the people who are closest to us are quite generous, it’s stayed pretty steady. It’s been almost eight years since the Great Recession and individual giving has been growing, and that’s the area where we’ve had consistent growth.”

Hart credits the orchestra’s outreach programs, which spread the word about educational programs with area schools and community groups as much as the artistic accolades.

“We’re emphasizing that a little more – what we can do for Buffalo versus what you can do for the BPO,” he said. “Most people who want to support the BPO, they see it as a true cultural treasure that Buffalo needs to have.”

When it comes down to dollars, though 90 percent of the funds come from 10 percent of the people, most donors support the BPO at the $75 level. With a budget of $12 million, the orchestra is budgeting a 3 percent increase in giving toward the $3.8 million annual fund.

“We love the fact that we have such a broad donor base and that so many people are supporting us in any way they can,” Hart said.

Others who run major campaigns said that looking at itemized giving alone paints only part of the picture. Lots of people give for the sake of giving, regardless of the tax implications.

Gerard Mazurkiewicz was chairman of this year’s annual fundraising appeal by Catholic Charities of Buffalo. He’s also a partner at Dopkins & Company LLP. Though high-wealth people certainly recognize the income tax and estate tax savings, taxes simply aren’t a motivator for most people, he said.

The Catholic Charities Appeal bears that out to some degree. Though corporate donations bring in about $1.3 million and high-wealth givers contribute another $2 million to $3 million, the remainder of the $11 million raised comes from individuals at the parish level.

“The premise is that everybody gives because they have some donative intent that governs the act of giving,” Mazurkiewicz said. “The corporations and high-wealth individuals, they’re asked for every kind of campaign and sometimes they just say no. I think the smaller givers are still a very interesting and crucial part of the campaigns that cannot be forgotten.”

But the campaign has relied increasingly on foundations and corporate gifts to reach the goal: According to Sister Mary McCarrick, diocesan director for the appeal, just 79 percent of donations in the 2017 campaign came from individuals at the parish level, down from 88 percent in 2010.

During the same period, the average gift was up from $144 to $282.

The organization also is looking outside the parish to the general Western New York community to make up the difference, she said.

Canisius College is working with Catholic Charities to survey people on how they give and what specific areas attract them. The survey will provide demographics to help charities better understand the giving patterns of different generations and backgrounds.

“It’s about how do you engage the lower cohorts while continuing to increase our per-person gifts,” McCarrick said. “You want to do both: retain donors and raise what they’re able to give you, and bring in new donors every year who will stay with you.”

The ability to reach people in new ways, and in ways that appeal to them, is part of what led the United Way of Buffalo & Erie County to establish new vehicles and programs for donors.

Michael Weiner, president and CEO, said the agency has worked to make up for the decline in employer-based giving through payroll deduction by offering other opportunities, such as crowdsourcing online, supermarket checkout and giving circles.

“United Ways are most susceptible where people of wealth give more than lower-income or working families,” he said. “It creates a vulnerability point. That could catch up with not only United Way but charities across the board.”

Though the average gift has increased here, the donor base erodes each year.

Foundation leaders said they notice, too, when individual giving levels shift. Many foundations have adapted their support in recent years beyond simply writing checks.

For the John R. Oishei Foundation, that also means providing philanthropic support in the areas of governance and leadership transitions, as well as with strategic planning and collaboration.

“We try to provide both or better understand if capital can improve their operations,” said Robert Gioia, president. “There are numerous asks out there for both. They’re asking for help with searches and about best practices in how to run and operate a nonprofit.

“The check is important,” he said, “but after the check can often be more important.”

The foundation also tries to stay ahead of trends, operating more proactively than reactively. That has led to some collaborative work with organizations to address mental health, addictions and poverty issues in the community.

Still, those are more big-picture grants and won’t necessarily make up for the loss of individual donors.

“The average request that comes in here can be six figures,” Gioia said. “Where I don’t think the average individual can do that, there are a number of folks who can give significantly and do it consistently.”

In the end, everyone wants to give and wants to do good, but many remain constrained by their own situation.

That’s according to Betsy Constantine, president of the Leave a Legacy initiative and executive vice president of the Community Foundation for Greater Buffalo. Those two roles put her in front of wealthy families and individuals trying to determine how best to distribute their wealth, while dealing with charities that try to reach those very people to solicit lasting, legacy gifts.

“What hasn’t changed is the people of Western New York are generous people,” Constantine said. “People who give through us are incredibly kind, generous and fulfilling. What I find time and time again is that people don’t give for the tax deduction; they give because they care.”